India is hoping for a marginal to significant advantage in exports of apparel, rubber, footwear, processed foods and meat products to the US, as its competitors could face relatively higher tariffs from August 1. However, the actual gains will depend on how the US tariff structure evolves over the next few weeks.
While the countries which got fresh tariff notices from the Trump administration on Monday still have room for negotiations, the actual tariff incidence on India will be known only after the interim India-US bilateral trade agreement (BTA).
President Donald Trump on Monday announced fresh tariffs on 14 countries, including Japan and South Korea. For countries with which India is competing in these labour-intensive product categories, extra tariffs of up to 36% have been announced.
On Bangladesh’s exports to the US, a 35% duty is proposed over amnd above the current levels, while for Thailand and Cambodia the extra duties proposed are 36%. For Indonesia, the extra tariff is 32%, and Vietnam, which sealed a trade deal with the US recently, the tariff is lower at 20%. India currently faces only a baseline tariff of 10%, besides the duties that existed earlier.
According to industry estimates, US tariffs on apparel from India, Cambodia, and Bangladesh previously ranged between 10–15% across categories. Under the new tariff regime, Bangladesh’s apparel exports could face aggregate duties of up to 50%, while Cambodia may see the tariffs rise to as high as 35%. In contrast, India is expected to face a total tariff (those existed earlier plus new baseline tariff) of around 25% or even lower, once the BTA comes into force. India is seeking to avoid the 26% reciprocal tariff.
Shares of major Indian textile companies rallied up to 17.1% intra-day on Monday following the announcement of a 35% tariff on goods imported by the US from Bangladesh. However, some of these companies pared their earlier gains by the close of the trading session. The top gainers included Alok Industries, Vardhman Textiles, Indo Count Industries, Trident, and KPR Mill.
The elevated duties on Thailand can lead to gains for Indian exporters of rubber and articles. Thailand is the top exporter of these products to the US with a share of 15.16% of US imports, while India is at fourth spot with 2.93% share. India exported $ 1.06 billion worth of these articles to the US in 2024, according to GTRI, a trade research outfit. The higher tariffs on Indonesia might give advantage to India in processed meat and fish products and footwear exports, it added.
Bangladesh is the third biggest exporter of apparel (except knitted or crocheted) to the US with a market share of 13.15% in calendar year 2024. India’s exports to the US in this category was $ 2.5 billion but it is not among the top three, according to an analysis by GTRI. In apparel knitted and crocheted Vietnam with a share of 17.99% of US imports and Cambodia with 5.99% are ahead of India whose share is 5.09% and shipments in value terms stood at $ 2.41 billion in 2024.
“India faces stiff competition from Bangladesh and Vietnam in the US garment market. In natural garments, an area of traditional Indian strength, the cost disadvantage is relatively small. However, in synthetic garments, the gap is significant. With tariff levels proposed now, India would be competitive against Bangladesh only in natural garments,” secretary general of Apparel Export Promotion Council (AEPC) Mithileshwar Thakur said.
However, a reduction in the reciprocal tariff under the upcoming BTA with the US to around 15% (from 26% proposed) could significantly improve India’s competitiveness across both natural and synthetic garment categories, he added. “This will create immense export opportunities for India, given the Indian apparel industry’s strong partnerships with American retailers and brands.”
Industry sources, however, noted that a marginal difference, say 3-4%, between tariffs faced by the two countries, may not benefit Indian garment exporters. Bangladesh will still be competitive with such narrow tariff differential.
Significantly, Bangladesh is set to graduate from the group of Least Developed Countries (LDCs) in 2026, a move that could end its preferential trade access to the European Union. This shift may raise the average tariff on Bangladeshi apparel exports to the EU from 0% to around 12%. In 2024, the EU imported apparel worth $92.56 billion, with China holding a 28% share and Bangladesh 21%. The loss of LDC status will narrow Bangladesh’s trade advantage and bring it on par with India, which currently faces a 12% duty on apparel exports to the EU.
The elevated duties imposed by the US on Thailand can lead to gains in exports of rubber and articles. Thailand is the top exporter of rubber and its articles to the US with a share of 15.16% while India is at fourth spot with 2.93% share of US imports. India exported $ 1.06 billion worth of these articles to the US in 2024, according to GTRI. The higher tariffs on Indonesia gives advantage in processed meat and fish products and footwear exports.
To be sure, Trump’s 35% tariff on all imports from Bangladesh is a marginal reduction from the initial 37% announced in April. Additionally, Trump announced that he was open to negotiation until August 1, the date the tariffs will be implemented.
Several textile companies are bullish on the potential gains for India after the new tariff levels come into effect, Ronak Chiripal, Promoter of Chiripal Group, said, “Brands in key markets like the US and UK are actively looking to diversify away from traditional suppliers such as China and Bangladesh. The Indian textile sector, with its scale, compliance, and evolving product capabilities is well-positioned to fill this gap.”
The US is one of Bangladesh’s largest export market for garments, contributing a fifth of its total exports of these items in 2024, with shipments of $7.34 billion. As much as 28.5% of India’s 2024 textile and apparel exports were accounted for by the US, amounting to $10.5 billion.
Currently, Bangladesh holds a 9% share in the US’s readymade garment market while India holds 6%. As a “mini-deal” between the US and India is awaited within the next 24 to 48 hours, other textile companies have maintained a wait-and-watch stance.
KM Subramanian, President of the Tiruppur Exporters’ Association, said factories at India’s largest knitwear garment hub are running at over 90% capacity, buoyed by the India–UK free trade agreement and a shift in global orders amid political and tariff uncertainties in Bangladesh and China. “Tiruppur exports the complete range of knitwear garments. Last year, we exported knitwear worth around Rs 45,000 crore, and we’re scaling up capacity to reach Rs 1 lakh crore in exports by 2030,” he said. The U.S. accounts for 35% of Tiruppur’s total knitwear garment exports, including men’s T-shirts and polos, and women’s leggings, tops, and loungewear, he added.
Sammir Dattani, Executive Director at Sanathan Textiles, said the tariff differential has placed Indian yarn manufacturers at an advantage. The Mumbai-based company is a polyester yarn manufacturer, is also a global supplier of cotton yarns, polyester yarns, and yarns used in technical textiles. “Apparel categories such as active-wear, sportswear, and “athleisure” are major contributors to exports to the U.S. and stand to benefit significantly from the revised tariff structure,” Dattani said.
Prabhu D, convenor of the Coimbatore-based Indian Texpreneurs Federation (ITF) said the situation remains fluid. Even prior to these tariff hikes, India had emerged as one of the fastest-growing apparel exporters to the US in the last three years, he noted. Cambodia was the biggest beneficiary, with apparel exports to the US growing at a CAGR of 3.9%, followed closely by India at 3.8%, albeit from a lower base. In comparison, Vietnam and Bangladesh saw slower growth at 1.4% and 1%, respectively.
(With inputs from Kishor Kadam)